Hank Paulsonhttp://www.newgeography.com/category/blog-topics/hank-paulson
The taxonomy view with a depth of 0.enBuffett and Paulson: Part of the Problemhttp://www.newgeography.com/content/001410-buffett-and-paulson-part-problem
<p>Warren Buffet, CEO of Berkshire Hathaway, and Henry “Hank” Paulson, former Treasury Secretary, were guests of honor at the <a href=http://www.omahachamber.com/CHAMBER/EVENTDETAIL.ASPX?EVENTDATEID=16492>annual meeting of the Omaha Chamber of Commerce</a> this week. </p>
<p>That the two of them are together should be no surprise: Paulson orchestrated the largest bailout of financial institutions in the history of the world – and Buffett is an owner of some of the largest financial institutions. To put it bluntly, Paulson helped bailed out Buffett’s financial institutions and now Buffett is <a href=http://www.cnbc.com/id/35316004/site/14081545/for/cnbc/>helping Paulson tout his book</a>. It’s not a pretty picture.</p>
<p>Yet, the event sold out well in advance. Granted, Buffett’s contribution to Omaha’s economy cannot be minimized. Warren Buffet keeps Omaha on the global map – travel anywhere in the world, tell them you’re from Omaha and see whose name comes up first. He is also a regular contributor to charitable and social causes throughout the region. Berkshire Hathaway’s (NYSE: BRK) companies employ about 246,000 people – though only <a href=http://www.berkshirehathaway.com/2008ar/2008ar.pdf>19 of them are at the Omaha headquarters</A>. None of BRK’s companies are among the <a href=http://www.selectgreateromaha.com/Site-Selection-Data-Major-Employers.aspx>top 25 employers in greater Omaha</a>. (Nebraska Furniture Mart, with just over 2,700, ranks 32nd and is the only one in the Top 100.)</p>
<p>We all have 20/20 vision in hindsight, including Senator Chuck Grassley (R-IA). In April 2009, seven months after the Bailout passed, Senator Grassley said of Paulson that Congress “was awed by a person who comes off of Wall Street, making tens of millions of dollars. … You think he knows all the answers and when it’s all said and done you realize he didn’t know anything more about it than you did.”</p>
<p>The Troubled Asset Relief Program (TARP) was sold to Congress and the American public as an absolute necessity to save the American Dream of homeownership. It was supposed to be used to help homeowners with mortgages bigger than the market value of their homes. As soon as <a hreaf=http://www.newgeography.com/content/00725-the-rogue-treasury>Paulson’s Treasury got the money they decided to bailout big banks instead</a>. Since then, Paulson, along with current Treasury Secretary Timothy Geithner, and Federal Reserve Chairman Ben Bernanke have refused to comply with demands from Congress to produce documents about the TARP recipients’ use of funds. The legislation was passed and the funds were released, and Treasury gave the money to banks with no restrictions on its use – no monitoring, no reporting requirements, no nothing.</p>
<p>So, why would Warren Buffett look so favorably on Paulson? Warren Buffett – our widely revered Oracle of Omaha – is one of those who built the boom in the capital markets and are benefiting from the bust. No surprise then that Buffett whose primary business vehicle is a financial holding company, supported the bailout of financial institutions. BRK’s businesses include, among others, property and casualty insurance and financial holding companies. </p>
<p>Of course Buffett was in favor of the bailout – <a href=http://www.newgeography.com/content/00669-we-need-a-new-oracle>his companies directly benefited as did the investments made by his companies</a>. He put $5 billion into Goldman Sachs preferred stock with a 10 percent dividend – a substantially better rate of return than the US government got on our $10 billion bailout. Berkshire Hathaway was the largest shareholder in American Express Co. when they received $3.4 billion from Uncle Sam. <a href=http://hosted.ap.org/dynamic/stories/U/US_BUFFETT_PAULSON_TALK?SITE=MAHYC&amp;SECTION=HOME&amp;TEMPLATE=DEFAULT>Paulson is now insisting that US taxpayers will profit from the TARP bailout</a> – if we do, which I doubt, I’m sure we won’t profit as much as Buffett did.</p>
<p>Paulson claims, in his book, that he turned to Buffett for advice about saving Lehman Brothers from demise. This strikes me as a very odd story, considering that Buffett told the press in March 2009 that he couldn’t understand the financial statements of the banks getting the bailout money. Add to this the fact that Senator Ben Nelson (D-NE) <a href=http://www.newgeography.com/content/00669-we-need-a-new-oracle>told me that he talked with Warren before voting</a> for the first bailout package. (I button-holed him after lunch with the <a href=http://www.sarpychamber.org/>Sarpy County Chamber of Commerce</a>) and you begin to get the real picture – the government was taking advice from financial institutions about the bailing out financial institutions.</p>
<p>To bring the problem full circle, consider this. In January, a bi-partisan Financial Crisis Inquiry Commission was appointed to <a href=http://www.usatoday.com/money/companies/regulation/2010-01-10-commission_N.htm>find the answers to the causes of the financial crisis</a>. They may not have to look any further than the nearest mirror. USA Today reported earlier this month that the members of the panel “<a href=http://www.usatoday.com/news/washington/2010-01-31-conflict_N.htm>have consulted for legal firms involved in lawsuits over the crisis</a>.” A Commission composed of members who earn their livelihood from financial institutions is unlikely to solve the mystery of the causes of the greatest financial collapse in the history of the world.</p>
<p>Like the Commission, Hank Paulson and Warren Buffett are part of the problem – not the solution.</p>
http://www.newgeography.com/content/001410-buffett-and-paulson-part-problem#commentsGeithnerHank PaulsonUS Federal ReserveWarren BuffettWed, 10 Feb 2010 09:39:26 -0500Susanne Trimbath1410 at http://www.newgeography.comNo Bailout of Small Businesseshttp://www.newgeography.com/content/00909-no-bailout-small-businesses
<p>CIT Group Inc. acknowledged today that “policy makers” turned down their request for aid. It’s always sad when a company fails and goes into bankruptcy – people lose their jobs, all the vendor companies that sell them products suffer from the loss of business, etc. But what makes this one especially sad is that CIT, <a href=http://www.bloomberg.com/apps/news?pid=20601087&amp;sid=au7g7OjDYZ10>according to Bloomberg News, “specializes in loans to smaller firms</a>, counting 1 million enterprises, including 300,000 retailers, among its customers.” </p>
<p>This news comes on the heels of an appearance by former Secretary of Treasury Hank Paulson before the House Committee on Oversight and Government Reform. Summing up after the hearing, Chairman Edolphus Towns (D-NY) admitted that Congress turned over complete authority to Paulson in the Bailout last fall (Troubled Assets Relief Program, TARP): “with no accountability, no checks and balances.” The result is “seemingly arbitrary decision-making.” </p>
<p>Representatives at the hearing repeatedly accused Paulson of deceiving Congress by telling them (and everyone else) that the bailout money would be used to help homeowners. In the end, it was as if the previous administration <a href=http://www.newgeography.com/content/00725-the-rogue-treasury>pillaged the U. S. Treasury</a> on their way out of town. </p>
<p>In the third of a series of hearings designed around the Bank of America merger with Merrill Lynch, <a href=http://www.cspan.org/Watch/Media/2009/07/16/HP/A/20860/House+Government+Reform+Cmte+Hearing+with+Henry+Paulson.aspx>Paulson told the Committee that he had the authority</a> to remove Ken Lewis as head of the bank if he didn’t go through with the merger. </p>
<p>Rep. Jim Jordan (R-OH) said there was “a pattern of deception.” He asked specifically, when did Paulson know that he was going to give the money to the banks – which he did on October 13 – after telling Congress on October 3 that he was going to use it to buy up bad mortgages? Paulson’s response was that he believed Congress knew they were giving him flexibility to do whatever he wanted – so he did.</p>
<p>The question now is this: did Paulson pick and choose among his friends to decide who got a bailout? Special Inspector General Neil Barofsky will <a href=http://oversight.house.gov/story.asp?ID=2544>report to the House Oversight Committee</a> next week with the release of his quarterly report to Congress on the use of TARP funds. Recall that Barofsky’s office is the only one with the authority to <a href=http://www.newgeography.com/content/00761-tarp-criminal-charges-possible>initiate criminal prosecutions</a>. Maybe Paulson is still on his list.</p>
http://www.newgeography.com/content/00909-no-bailout-small-businesses#commentsbailoutHank Paulsonsmall businessFri, 17 Jul 2009 15:14:19 -0400Susanne Trimbath909 at http://www.newgeography.com